To Spotify or not to Spotify?

Music distribution is a minefield of opinions and interpretation at the moment: Physical vs Digital. Streams vs Downloads, Demos vs Studio Recordings, Paid vs Subscriptions vs Adverts. But there’s at least one good thing to come from all this confusion – Choice. The power is most certainly in the artist’s hands. As an unsigned artist, it was almost impossible to distribute your music globally 10 years ago, but now, for a moderate fee you can. But which method is the best? iTunes? Spotify? Do you use a combination? Or are artists best sticking with old fashioned CD’s that they can sell at their gigs?

In the past there have often been complaints from record labels and artists about the amount of revenue they receive from streaming services such as Spotify. A notorious case back in November 2009, Spotify users in Sweden racked up one million plays of Lady Gaga’s ‘Poker Face’, Spotify then paid the artist £100 in royalties. This led Swedish musician Magnus Uggla to state that he would rather his music was pirated, and he later withdrew his music from the service, an approach which has recently been adopted by the likes of Coldplay, Adele, The Black Keys and Tom Waits, who have all withheld recent releases from Spotify and other streaming services. This sort of speculation in the media has put the actual royalty paid per play between 0.19 and 0.3 pence, which would mean between £1,900 – £3000 was paid in royalties to Gaga for those 1 million streams, although the precise per-play royalty does not appear to have been confirmed by the company.

Swedish band Coby Core plays at the Spotify offices

Spotify have spoken up about how satisfied they are with the revenue their artists receive from streaming, claiming some of them receive more from streaming than downloads or physical sales. Apparently, Spotify alone paid out royalties of over $180 million to musicians in 2011 and the figure looks set to double for 2012. It would be interesting to know the number of artists who are all expecting a slice of that pie? Our guess is lots, and according to most unsigned musicians and small record labels, their slice is looking rather thin.

Brian Brandt of Mode Records, an NYC based label specializing in contemporary classical music for 26 years, have over 250 releases to their name. Although they recognise that they have a niesh market and generate modest sales of around 6,000 units, on a typical CD sold through a distributor they may make a profit of $3-4 per unit. Brian claims that sales through iTunes or similar service can yield a similar profit. But with the Spotify model things get a little different, for example, in June 2011, Mode had a total of 11,335 streams through Spotify; from this their income was a whopping $36.98! They also had a big individual seller that month which was streamed 1,326 times through Spotify; their income from that track – $4.18. So, Mode Records reckon they earn about 0.3 of a penny per stream, which is then to be split with the artists and composers.

With companies like Ditto Music offering reasonable hosting packages for unsigned artist to get their material published via the majortiy of the digital distributors, using Spotify may be the right thing to do, but for an unsigned artist to make the Ditto’s moderatly price yearly fee of £17.50 back via streaming alone, their track would have to be streamed over 5,833 times before breaking even. To help put this into perspective, on a song that’s around 4 minutes long, that song would have to clock up over 16 days of air time to earn £17.50. Compare this to iTunes current rate of commission, which is around £0.71 per track, you would need around 25 track downloads per year to break even. Luckily, the beauty of Ditto Music’s service (like many other digital distribution resellers) is that you get multiple services under one roof, and with Spotify’s publicity growing by the day, maybe unsigned artists need to look at streaming as a way to get paid in exposure instead of pounds, but as we all know, exposure doesn’t necessarily pay the bills.